NTPC Barh vendors allege local goons issuing extortion threats

Plan of action: NTPC chairman and managing director R.S. Sharma says if there is any problem, it will be taken up with the appropriate authorities, adding that the confidence of the vendors has to be

Updated: Wed, Jan 07 2009. 09 57 AM IST

New Delhi: State-owned NTPC Ltd’s Barh power project in Bihar seems to have run into trouble, with the companies engaged by the power utility to construct the plant alleging that extortion demands have been made of them by the local underworld. The resulting delay could affect NTPC’s plans to raise its generating capacity to 50,000MW by 2012.

“We are facing huge problems due to the threats being issued by the local miscreants. We have taken up the issue with the authorities at the project site and even at NTPC,” said an executive at one of these companies who asked that neither he nor his company be identified, citing commercial considerations.

Plan of action: NTPC chairman and managing director R.S. Sharma says if there is any problem, it will be taken up with the appropriate authorities, adding that the confidence of the vendors has to be restored.

While a senior executive at NTPC denied that there were law and order issues at Barh, the company’s chief executive said he would have to study the issue.

“There are 5,000 people working at the project site here. There is no problem inside the plant,” said a senior NTPC executive who spoke on condition of anonymity.

“We will have to see this. However, nothing has come to my notice. If there is any problem, we will it take up with the appropriate government authorities. The confidence of the vendors has to be restored. Let me look into the matter and we will take up the issue with the Bihar government,” said R.S. Sharma, chairman and managing director, NTPC.

The Barh power plant, which will generate 1,980MW, is being built at a cost of Rs8,700 crore. Power from the plant is expected to feed India’s eastern, western and northern regions. Companies involved in this process include National Buildings Construction Corp. Ltd, ABB India, Larsen and Toubro Ltd and Bharat Heavy Electricals Ltd, or Bhel.

A Bhel executive said that companies to which firms such as his typically outsourced some work from contracts such as the Barh one were simply refusing to tender bids.

“There is a labour problem at the Barh project site. We anyway have only a small package for the project for the switch yard,” said the executive, who didn’t want to be identified.

NTPC, India’s largest power generating firm, currently produces 29,144MW. Barh is among the six units where it will use the fly ash left over after generating power to make cement.

Madanagopal, an analyst at Mumbai-based Centrum Broking Pvt. Ltd, who uses only one name, wrote in an 18 November report: “NTPC has planned...capacity addition of about 22GW (one gigawatt, or GW, equals 1,000MW) by FY12. However, most projects are facing delays due to equipment...constraints, due to which we expect only 11GW to get commissioned before FY12 and 16.4GW by FY14.”

Work on the Barh project, already behind schedule for two years, has virtually come to a standstill following contractual disputes between the state-owned power producer and Russia’s Technoprom Export and Power Machines Co. over the supply of boilers and steam turbine generators, respectively. India has, however, relented on a contractual dispute between NTPC and Technoprom Export, under pressure from Russia, as reported by Mint on 19 December.

NTPC plans to send a team to Russia to resolve the dispute with Power Machines in the second week of January.

“Law and order issues are affecting many projects in the region, including generation, transmission and mining projects. Given that the country will rely on a significant amount of capacity addition in Bihar and Jharkhand, the government needs to pay close attention to this,” said Anish De, chief executive at Mercados Asia, an energy consulting firm. Mint had reported on 11 June that Naxalites were opposed to the expansion of Damodar Valley Corp.’s Rs2,000 crore power plant at Chanderpura in Jharkhand.

Jharkhand has large coal reserves, making it an attractive destination for power firms. India has 256 billion tonnes of coal reserves, of which around 455 million tonnes are mined every year. Of this, Jharkhand accounts for the highest concentration of coal reserves at 28.95% of the total, followed by Orissa at 24.60%.